Question: U a (X,Y) = X^2 * Y U b (X,Y) = X*Y For consumer A MUx = 2XY MUy = X^2 For consumer B MUx
U a (X,Y) = X^2 * Y
U b (X,Y) = X*Y
For consumer A
MUx = 2XY
MUy = X^2
For consumer B
MUx = Y
MUy = X
Initial Endowments
Consumer A : 25 units of good X and 10 Units of good Y
Consumer B : 100 units of good X and 10 units of good Y
Now, Suppose Px or Price of good X = 1
A) What is the value of Py or Price of Y that will result in a competitive equilibrium?
B) How much of each good will each consumer demand in equilibrum?
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
